News Article - Tough Times for Business

Many businesses are facing tough times at present and it is more important than ever to conserve cash and make best use of the tax breaks available.

If you need to incentivise and retain employees, salary isn’t the only option to consider. Some employers are offering increased holiday entitlements as a “non cash” benefit while others are offering key employees shares in the business – this can be an effective way to encourage key people to stay with the business at no immediate cash cost; it can also be done very tax efficiently in many cases and motivate employees to help build the value of the business long term. Reviewing company car policy to favour cars with low CO2 emissions can save tax for both employers and employees. You can also save tax and national insurance by contributing to pension funds via a salary sacrifice - but the rules need to be observed carefully.

If cash flow is tight, businesses should consider whether the annual VAT accounting scheme, which evens payments across the year, might be of assistance and full advantage should be taken of VAT bad debt relief when customers don’t pay. There is also a new initiative from H M Revenue & Customs to help businesses struggling with cash flow, the Business Payment Support Service. If you need more time to pay your business taxes then you can call the support line on 0845 302 1435.

If your year end is approaching – as it will be for many businesses with 31 March and 5 April year ends – consider whether to accelerate expenditure to obtain tax relief in the current year. This applies particularly to capital expenditure where some or all of the £50,000 Annual Investment Allowance is still available. If the business will make a loss, take advice on how this can best be utilised for tax purposes. If you undertake research and development work, you should consider the scope for claiming R&D tax relief which can be available at more than 100%.

And whatever you do, don’t take risks with your tax planning in the hope that H M Revenue & Customs won’t notice. Keeping the right side of the law is vital. HMRC have been given new powers to examine business records and premises, so keeping your records in good order and your planning safe from challenge is critical.

Thinking of tax as a key part of your business cash flow is more important than ever – and so is good advice, which can pay for itself many times over.

Why not call us to explore ways we can help?